Pennsylvania Court Denies Certification Of Disability Discrimination Claims

Posted by Greg Mersol on April 26, 2013

In the vast majority of discrimination cases, there is little dispute over whether the plaintiff is actually in a protected group.  For example, in sex discrimination cases, for the most part, they are either male or female; in age cases either over or under 40.  Despite the demographic changes in the country, there are few disputes over whether even a plaintiff of mixed ancestry belongs in a particular group for purposes of race discrimination claims.

But disability claims are different.  While with the ADAAA the definition of a disability has been expanded under federal law, there remain threshold questions of whether the plaintiff is even in a protected group.  If so, there remain questions as to the extent of the disability and whether the plaintiff can perform the essential functions of the job.  While there is a generally limited number of genders, races, and ages, there are likely hundreds of conditions that may be considered disabilities.  Further, the admonition under most disability discrimination statutes includes the requirement of reasonable accommodation, one that virtually by definition requires an individual consideration of the plaintiff’s condition and job circumstances.

Because of these highly individualized inquiries, disability discrimination claims generally make poor candidates for class action claims, as a recent case from the Western District of Pennsylvania demonstrates.  In Semenko v. Wendy’s International, Inc., Case No. 2:12-cv-0836 (W.D. Pa. Apr. 12, 2013), the plaintiff brought a putative class action against the Wendy’s fast food chain for alleged disability discrimination under federal and Pennsylvania law.  With respect to her own claim, she contended that Wendy’s failed to accommodate her degenerative arthritis after her return for a leave of absence. 

As an aside, while any disability may be difficult to treat on a class basis, degenerative arthritis is an especially hard condition as it differs greatly even among those who have it and, as the name reflects, changes over time even for one individual.  The plaintiff further was not helped by a relatively vague class definition that simultaneously referenced accommodations after returns from leaves of absence and accommodations generally.  Even during the course of briefing, she shifted her class definition to include reference to “permanent medical restrictions” and those who “applied for long-term disability benefits.”  As suggested below, the plaintiff may not have aided her own cause by failing to have a clearer class definition.

In any event, the employer filed a Rule 12(f) motion to strike the class allegations without awaiting discovery.  The court noted that such a motion could only be granted in “rare” cases, but in a welcome burst of common sense, found that it was facing just such a case.  Citing the decision in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011), it found no commonality due to the need to determine whether each potential class member was disabled and “otherwise qualified.”  The need for the additional personalized inquiries under the ADA made such cases even less appropriate for class action treatment than those under Title VII.  It similarly found that the claims would require consideration of whether the class member requested accommodations, the reasonableness of the proposed accommodations, undue hardship, and the ultimate question of whether the employer had discriminated against the individual.  These inquiries undercut both the elements of commonality and typicality.  Further, the court found that the need for individualized inquiries made Rules 23(b)(2) and 23(b)(3) inapplicable due to the prayers for money damages and the lack of sufficiently predominant class issues.  The court therefore struck the class allegations.

The Semenko case underscores the problems with plaintiffs trying to seek certification of ADA classes.  While some courts have certified such cases, they are particularly hard in the absence of a uniform policy or a tight definition of the types of disabilities to which it applies.

The bottom line:  Plaintiffs seeking to assert class-wide disability claims face an uphill battle.

Tenth Circuit Affirms Refusal To Certify Sex Discrimination Class

Posted by Greg Mersol on January 24, 2013

Hilti, Inc. sells power equipment for use in construction sites.  A quick trip through its website (http://www.us.hilti.com) reveals tools most people wouldn’t have in their home workshops, such as 1100-watt demolition hammers, gas-powered fasteners, and cordless drywall screwers.  Given this product mix, as one might expect, an important part of its sales consists of direct marketing to contractors at their worksites.  So, how can a company in that line of business best select its sales force?

In Tabor v. Hilti, Inc., Case No. 11-5131 (10th Cir. Jan. 15, 2013), the court addressed the issue of whether the company’s method for selecting employees for “Account Manager” positions that would actually visit construction customers discriminated against women.  Hilti initially hires sales staff as inside sales representatives, who primarily provide sales and customer support by telephone.  The company made decisions whether to promote such representatives to Account Manager positions through a process called “Global Develop and Coach Process”, or “GDCP.”

The core of the GDCP system was the assignment of a ranking to the employee, ranging from P1 (meaning readiness for promotion) through P5 (meaning the employee was ineligible for promotion).  The system also took into account factors such as the employee’s willingness to relocate and their career goals.

The plaintiffs were two female inside sales representatives who sought unsuccessfully to become Account Managers. They brought suit under Title VII challenging the company’s failure to promote them.  They cited statements made in job interviews reflecting stereotypes about the ability of women to relate to men in construction sites as well statistical evidence that the GDCP had a disparate impact on women.  The district court granted summary judgment in the employer’s favor, and also denied certification of a class of approximately 300 women who sought to become Hilti Account Managers.

On appeal, the Tenth Circuit issued a split decision.  Most of the opinion focused on the individual claims of sex discrimination by the two lead plaintiffs.  It ultimately concluded that the district court had improperly granted summary judgment on most of their claims, relying largely upon the evidence of discriminatory statements during job interviews.  The court also largely accepted the plaintiffs’ statistical evidence regarding the disparate impact of the GDCP.

The court’s opinion in that regard is a little curious.  The court cited with some approval the 20% or 4/5 rule described in the EEOC guidelines, although other courts have found the test to carry less weight. See Isabel v. City of Memphis, 404 F.3d 404 (6th Cir. 2005) (rejecting result under 20% rule in favor of appropriate statistical analysis).  After citing the test, however, the court notes that the plaintiffs’ statistician had conducted a proper regression analysis reflecting that the promotion rate for males was 60% higher than for females, so the reference to the 4/5 rule was likely irrelevant.

Although the court found questions of fact justifying reversal of summary judgment, the remainder of the opinion largely favored the defendant.  Even though the court reversed as to one plaintiff, it noted that her disciplinary history might very well result in summary judgment being granted against her again.

As to the class certification issue, the Tenth Circuit affirmed the district court’s refusal to certify the class in light of the decision in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011).  Given that the court spent almost 35 pages of its opinion analyzing the plaintiffs’ individual claims, it is not surprising that the court found that there was no commonality.  It concluded that the decisions, including the development of the GDCP score, were made on an individual basis with largely subjective criteria and different factors went into each decision.  Even if the plaintiffs had established commonality, the court found that the class issues, despite the statistical problems with the GDCP, did not predominate under Rule 23(b)(3).  The court therefore found that the decision to deny certification was proper.

The bottom line:  Even with statistical evidence and company policies alleged to have disparate impact, Dukes makes it difficult to certify classes when individual issues are still in play.

 

 

Sixth Circuit Gets it Wrong on Title VII Pattern or Practice Claims

Posted by Greg Mersol on November 26, 2012

The “frappe” button on a blender is useful for all kinds of recipes when you want to mix things up, but it, until now, has not been considered a viable rule of statutory construction.

We’ve written before (previous post) about Title VII’s structure and, to a degree, its legislative history. The statute provides a number of tools to address different types of discrimination, and Congress very specifically spelled out what type of claim could be brought and under what circumstances. These legislative decisions were also bound up on Congress’s view that the EEOC was to work first by informal efforts at conciliation and that different means of proof called for different handling and remedial schemes.

The EEOC does have different tools at its disposal. Under section 706 of Title VII, it can bring a garden-variety claim of discrimination and recover extensive remedial relief and damages (up to Title VII’s caps), including on a class-wide basis. Under section 707, the EEOC can bring a “pattern or practice” claim if it can show that the employer’s “standard operating procedure” was to discriminate. See Teamsters v. United States, 431 U.S. 324 (1977). The upside (for the EEOC) is that in a section 707 case, the Commission can shift the burden of proof to the employer to prove that it did not discriminate in a given situation. The downside is that there are more limited damages, and the case is tried to a court, not to a jury.

Yes, the scheme forces the EEOC to make a choice, but it is one that Congress made and reflects careful choices in the methods of proof and the available damages. The “pattern or practice” claim does ease the burden of proof for the purposes of equitable relief, but since the Commission is being relieved of its obligation to prove that a given individual was the subject of a given discriminatory decision, it also makes sense to limit relief. The relief provided, incidentally, still includes panoply of equitable remedies. Of course, given Title VII’s emphasis on informal efforts to conciliate, having the different schemes also aids the conciliation process by requiring the EEOC to find and discuss the alleged pattern or practice with the employer before filing suit.

But wouldn’t it be much easier, if you were the Commission, just to throw the two claims into a blender and to use the best of each? Some courts have examined Title VII and have determined that it cannot. See our related post from June 15, 2012.

Last week, a divided Sixth Circuit demoted “pattern or practice” claims to a mere “standard of proof” and held that it can. In Serrano v. Cintas Corp.pdf., Case. No. 10-2629/11-2057 (6th Cir. Nov. 9, 2012), the EEOC did try to assert both claims under section 706, as well as class-type claims, in a generally vague complaint. It asserted that uniform supplier Cintas discriminated against women in its sales positions. The district court held that the Commission could not bring a pattern or practice claim under the rubric of section 706 and ultimately granted summary judgment for the employer.

The Sixth Circuit panel consisted of two Sixth Circuit judges and one senior judge from the Ninth Circuit. The court issued a 2:1 decision reversing the district court with one Sixth Circuit judge, Karen Moore, writing the majority opinion and the other, Julia Gibbons, dissenting.

For such a difficult issue, the case presented less than pristine facts. First, of course, the district court’s finding that there was no sufficient evidence that discrimination even took place as to the individual claimants suggests strongly that there was no “pattern or practice.” “Pattern or practice” evidence, proof that the employer operates under a general practice of discrimination, would very likely result in there being a question of fact on the individual claims as well, yet even the majority opinion identified no such evidence. There were also serious questions as to whether the Commission had adequately pleaded a pattern or practice claim, an issue that would have caused the dissent to affirm. In light of its decision, the majority ordered additional discovery, including possibly the defendant’s CEO, but in doing so the majority violated the Sixth Circuit Rule not to rely upon unpublished decisions, as it also did with respect to its underlying holding that a pattern or practice claim could be pursued under section 706.

The Serrano decision is troublesome and will simply make the defense of traditional Title VII claims more difficult and expensive. Given the conflict among the courts, at some point this issue may call for Supreme Court review.

The Bottom Line: The Sixth Circuit has held that the EEOC may pursue pattern or practice theories under section 706 of Title VII.

EEOC Ordered To Produce Class Members For Deposition (Again)

Posted by Greg Mersol on November 20, 2012

We’ve written in the past that the EEOC, at times, lives by the adage “don’t let the facts get in the way of a good story.”  A recent case demonstrates that the facts are, indeed, relevant and that the EEOC must permit the employer discovery to test the factual theories it presents in litigation.

In EEOC v. DHL Express (USA), Inc., Case No. 10C6139 (N.D. Ill. Oct. 31, 2012), the EEOC brought suit against carrier DHL, contending that it discriminated against a class of 94 African American dockworkers and drivers on the basis of their race. The EEOC contended in general that the workers were given “less desirable” assignments that were “more difficult” and “more dangerous” than those given to whites.  It also claimed that black drivers were assigned to “black neighborhoods” more frequently than whites.  Rather than produce evidence to support these claims, the EEOC provided unsworn “vignettes” about the situations it was claiming on behalf of the individual class members.

The employer took depositions of 34 of the 94 potential class members, but the EEOC refused to produce additional members for litigation, contending that the sampling of roughly one third of the class members was sufficient and citing the cost of further depositions.

The court was obviously unimpressed with the EEOC’s level of proof.  It noted that the unsworn “vignettes” were not evidence and, in fact, that the depositions of even the 34 members had proven them to be less than accurate.    It was also troubled by the generally vague allegations by the Commission and noted differences in testimony as to what constituted, for example, a “more dangerous assignment” or a “black neighborhood.”

The court similarly rejected numerical limits on the depositions, citing the Eighth Circuit’s similar rejection of limits in EEOC v. CRST Van Expedited, Inc., 679 F.3d 657, 670 (8th Cir. May 8, 2012) (ordering production of 270 claimants for deposition).  It directed the EEOC to produce all of the claimants to be deposed.

The DHL decision raises serious questions about the EEOC’s prosecution of its case, much as the court did in the CRST Van case in the Eighth Circuit.  One might wonder why the Commission refused to produce proof of evidentiary quality to begin with, and then to resist further depositions once the “vignettes” proved to be inaccurate.  Further, vague allegations such as “more difficult” or “black neighborhood” should have been fleshed out before the lawsuit was even filed.  If, in fact, the EEOC reasonably believed that the employer was somehow guilty of discrimination, it should have been able to articulate why and to produce at least some evidence that the class-wide allegations were true. 

The Bottom Line:  The EEOC must produce proof of evidentiary quality and likely must make its claimants available for deposition if it is going to claim class-wide discrimination.

Seventh Circuit Reverses Certification of Construction Workers' Race Discrimination Classes 
Based Upon Wal-Mart

Posted by John Lewis on August 13, 2012

The U.S. Court of Appeals for the Seventh Circuit, in an opinion written by Chief Judge Frank Easterbrook, reversed an Order certifying two multi-site classes of black construction workers alleging race discrimination based upon the U.S. Supreme Court’s decision in Wal-Mart Stores v. Dukes, 131 S. Ct. 2541 (2011).  In Bolden v Walsh Construction.pdf, (No. 12-2205, August 8, 2012) the Seventh Circuit panel found the 12 named plaintiffs failed to satisfy the requirement of Federal Rule of Civil Procedure 23(a)(2) that a class may be certified only if “there are questions of law or fact common to the class.”

The Background

The 12 plaintiffs had worked for Walsh Construction in the Chicago Metropolitan area in 2002 and earlier.  They contended that since 2001, the Company violated Title VII of the Civil Rights Act of 1964 by permitting its superintendents to engage in or tolerate two types of racial discrimination – one in assigning overtime and the other in working conditions at 262 work sites.  Plaintiffs presented statistical evidence, through an expert, Stan V. Smith, that black workers were less likely to work overtime than white or Hispanic workers.  They also contended that some superintendents and foremen used demeaning words or terms to refer to black workers and permitted derogatory graffiti and hangman’s nooses in toilets and break sheds.

Walsh countered that, among other things, its sites had different superintendents with different practices and that it quickly removed objectionable graffiti or objects.  Nevertheless, the District Court granted plaintiffs’ request and certified two classes covering all Walsh Construction’s 262 sites in the Chicago area since mid-2001.  One was referred to as a “hostile-work environment class” and the other as the “overtime class.”

Walsh appealed the district court’s certification decision pursuant to Federal Rule of Civil Procedure 23(f).

Problems With the Classes

The Seventh Circuit found problems abounded with the classes.  As a threshold matter, the class definitions were flawed.  First, the class definition should not have extended beyond 2002 given the named plaintiffs tenure with Walsh.  Second, the overtime class improperly defined its members as those who earned less “because of their race”:

Using a future decision on the merits to specify the scope of the class makes it impossible to determine who is in the class until the case ends, and it creates the prospect that, if the employer should prevail on the merits, this would deprive the judgment of preclusive effect: . . . .

The court described these problems as “reparable,” meaning the language could be modified.  Yet, other flaws could not be repaired.

The “Commonality” Problem

One irreparable problem was “commonality.”  The 262 or more sites had different superintendents with different policies.  Superintendents moved to new sites with different foremen and employees as projects were finished.  The sites had substantially different working conditions – most superintendents did not discriminate and those who were alleged to discriminate had left the Company.  The U.S. Supreme Court in Wal-Mart had held that Rule 23(a)(2) forecloses certification where plaintiffs allege that discretionary acts by managers resulted in the discrimination effects.  Following Wal-Mart, the Seventh Circuit explained: “Commonality requires the plaintiff to demonstrate that the class members ‘have suffered the same injury.’”  So, “when multiple managers exercise independent discrimination, conditions at different stores (or sites) do not present a common question.’”

The plaintiff’s statistical evidence also had the same infirmity as in Wal-Mart.  Plaintiffs’ expert “assumed” the proper unit was all Walsh’s Chicago area sites but never attempted to establish it.  Nor did Mr. Smith “control for variables other than race.”  The panel did not determine whether the Smith study would have passed muster under Federal Rules of Evidence 702.  It was sufficient to find that the study did not identify any common issues that would support a multi-site class.

Premised on Wal-Mart Stores, the Seventh Circuit found that a multi-site class could only satisfy Rule 23(a)(2) if the company’s policy or procedures applied to all sites.  In Bolden, like Wal-Mart, the Company had a uniform policy against discrimination but plaintiffs argued permitting local managers to excise discretion undermined it.

The Seventh Circuit also followed Wal-Mart in denying plaintiffs’ contention that local discretion had a disparate impact that warranted class certification.  Indeed, Judge Easterbrook cited Wal-Mart for the proposition that “allowing discretion by local supervisors . . . is just the opposite of a uniform employment practice that would provide the commonality needed for a class action . . . .”  Thus, the appellate court concluded that a class including all Walsh’s 262 or more sites could not be certified.

Finally, the Bolden panel also found the hostile-environment class was not manageable, requiring at least one trial per site.

The Bottom Line:  Relying on Wal-Mart, the Seventh Circuit found that two classes of black workers could not demonstrate that their claims presented a common issue under the rigorous standard for Rule 23(a)(2) commonality established by the Supreme Court.  Once again, a court has invalidated broad classes without common, viable claims to bind them together.

Texas Court Dismisses EEOC Pattern or Practice Claim

Posted by Greg Mersol on June 15, 2012

This blog relates to a highly technical and, in some respects, dry material, so let’s try to avoid getting overly legalistic.

Introduced back in the 1970’s, a line of children’s clothing called Garanimals was popular with parents.  The idea was that you could buy the Garanimals clothing and not worry about your children wearing patterns or styles that clashed.  Each item in the Garanimals line had a picture of an animal, and all your child had to do was to make sure that pieces of the clothing they wore had matching animals (all with the lion, the zebra, the okapi, etc.).  All in all, it was a pretty good idea, and also a good way to make sure that consumers bought essentially complete wardrobe of your product, or else the system wouldn’t work.

Title VII is a little like the Garanimals system.  The EEOC has broad enforcement powers under Title VII.  In addition to processing routine charges of discrimination, it can request records, can assert Commissioner’s charges, and can maintain essentially class action claims in court with fewer requirements than those imposed on private plaintiffs.

Unlike private plaintiffs, if you are the EEOC you can bring two types of claims.  First, you can bring a straightforward discrimination claim for equitable relief and damages, so long as you meet the burden of proving that the employer engaged in an act of discrimination.  This is a section 706 claim, but we can call it the “lion” pattern.  The good news is that the recovery can be extensive, including money damages up to Title VII’s caps.  The bad news is that you have to prove that the challenged decision was the result of unlawful discrimination.

The second type of claim is one for a pattern or practice of discrimination under section 707. We’ll call this the giraffe claim.  To establish a pattern or practice claim, the EEOC must show that the employer’s “standard operating procedure” was to discriminate.  If it makes that showing, it can shift the burden of proof to the employer to show that a given decision was NOT the result of illegal discrimination.  See Int’l Bhd. Of Teamsters. v. U.S., 431 U.S. 324 (1997).  The downside is that there is no right to trial by jury and the relief is limited to equitable relief.  So in a giraffe (section 707) claim, the burden of proof is easier, but the damages are less extensive.

So, can you mix the lion (section 706) and giraffe (section 707) claims to get both the easier burden and the greater damages?  The fashion police, and now the United States District Court for the Southern District of Texas say “no.”  In EEOC v. Bass Pro Outdoor World, LLC, the EEOC tried to bring a section 707/giraffe/pattern or practice claim under the rubric of a section 706/lion/discrimination claim.  It contended that it could bring a pattern or practice claim under section 706, take advantage of the easier burden of proof of section 707, and recover the higher section 706 damages.  It sought to pursue such claims on a nationwide basis against Bass Pro Outdoor retail chain.

These enforcement provisions have proven up to the task for decades, and as reflected in this blog, the commission has been guilty of overreaching in several cases, resulting in the imposition of serious sanctions from the courts.  Still, however, the EEOC wants to wield an even bigger club against target employers, and has tried to get the best of both worlds in claims against larger employers by trying to combine the two types of claims.

The district court, however, after reviewing Title VII’s language and history, found that the two could not be mixed, and that if the EEOC could maintain a pattern or practice claim under section 706, section 707 would be rendered redundant.  It therefore dismissed the section 706 “pattern or practice” claim, although it did give the EEOC leave to amend to fix other pleading deficiencies.

This may all sound like issues that are only important to lawyers, but the impact of a contrary decision would be to make it much harder for employers to defend EEOC pattern or practice claims.  This decision also stops the EEOC dead in its tracks (whether a lion or a giraffe) in its attempt to bring ever larger claims alleging systemic discrimination against employers with nationwide operations.  Title VII’s structure, like that of the Garanimals clothing line, only works if you don’t mix products that clash.

The Bottom Line:  Despite its effort to bring ever larger and more dangerous claims, EEOC cannot try to take advantage of both the greater damages of a garden variety discrimination claim and the easier burden of a pattern or practice claim in the same case.

 

 

 

 

 

 

Court Dismisses Class Race Claims for Failure to Raise in Charge

Posted by Greg Mersol on May 31, 2012

Illinois District Court Refuses to "Supersize" Race Discrimination Claims Against McDonald's

In this day and age when discrimination lawsuits are commonplace, it is all too easy to forget that Title VII was passed in the hopes that discrimination claims could and would be resolved outside of court.  When Congress enacted Title VII, it expressly included the requirements of the filing of a charge, and of conciliation, to resolve discrimination complaints without litigation.  Ironically, it is now the plaintiffs' bar that tries to get around these requirements by filing charges that do not include class allegations, and then seeking to assert them in court once a charge has been dismissed.

Not so fast.  Numerous courts are refusing to permit a plaintiff to pursue class action allegations when they have not been raised in a charge or have only been raised obliquely, as a recent decision from the Northern District of Illinois demonstrates.  In Dovgin v. McDonald's Corporation.pdf, Case No. 11 C 7883 (May 25, 2012, N.D. Ill.), three plaintiffs raised various race or religious discrimination claims against McDonald's. In each case, the plaintiffs had filed charges addressing their own personal situations, but that did not reference class wide discrimination.  In the subsequent lawsuit, however,  they sought to pursue class-wide claims. 

The District Court dismissed the class-wide allegations.  It found that a charge was intended to fulfill two purposes, providing notice to the defendant and giving the EEOC the opportunity to investigate and conciliate.  Absent class allegations in the charge, such claims could not be pursued in court.

While not addressed in the court's opinion, one can only wonder why the claims were brought in the manner they were.  McDonald's has a robust diversity commitment and has strongly supported minorities as franchisees and vendors.  Put another way, while a large employer, it has an enviable record on race.   Moreover, the plaintiffs brought claims for different types of race discrimination (African American, Korean, Indian) and religion, as well as for different alleged discriminatory acts (training, negative performance reviews, discharge).  Had the plaintiffs properly alleged class claims in the charge, it is difficult to see how such claims could proceed as a class.

One might also wonder why class allegations were not alleged in the charge.  The EEOC has made addressing systemic discrimination a priority and has aggressively pursued such claims against many employers.  Apart from the desire to bring a claim directly in court, a desire Title VII discourages, such claims should be raised to promote Title VII's aims of resolving claims outside of litigation.

The Bottom Line:  A plaintiff cannot assert Title VII class claims without identifying them in a properly filed charge of discrimination.

Pattern-or-Practice Claim Doesn't Trump Arbitration Agreement - Karp v. CIGNA Healthcare Inc.

Posted by John Lewis on April 23, 2012

Once again a court has been required to consider whether a federal statutory claim might limit the reach of the Federal Arbitration Act, 9 U.S.C. § 1 et. seq. (“FAA”), and prevent arbitration of an individual discrimination claim.  This twenty-two-page decision reflects the on-going struggle by plaintiffs to discover potential exceptions to the U.S. Supreme Court’s decision in AT&T Mobility LLC v. Concepcion.

On April 18 a Massachusetts district court held that a plaintiff must arbitrate gender discrimination claims despite alleging that her employer engaged in a pattern-or-practice of sex discrimination violative of Title VII of the 1964 Civil Rights Act and state law.

In Karp v. CIGNA Healthcare Inc.pdf (Case No. 11-CV-10361, D. Mass, 04/18/2012), Judge F. Dennis Saylor, IV compelled arbitration of Bretta Karp’s individual sex discrimination claim despite her arguments that she never waived her rights to a class action or class arbitration proceeding and that individual arbitration would deny her statutory rights under Title VII to bring a pattern-or-practice claim.

The Dispute Resolution Procedure

Karp, a former Provider Contract Manager, began working for CIGNA in 1997 and in early 1998 signed a receipt acknowledging that she received the Company’s 1998 Employment Dispute Arbitration Policy requiring employees to arbitrate their disputes with the company instead of going to court.  The 1998 policy did not reference class actions or class arbitration.

In 2005, CIGNA revised its Employee Handbook to reflect changes in its policies and procedures and circulated an e-mail to advise employees. The e-mail provided a link to an electronic version of the Handbook and required employees to complete an electronic receipt.  Karp checked “yes” on the Handbook receipt, which acknowledged that she reviewed the 2005 Handbook and agreed that disputes would be resolved through CIGNA’s Employment Dispute Arbitration Program.  Neither the Handbook, CIGNA’s e-mails nor the electronic receipt mentioned class arbitration or a class action waiver.  However, as noted above, the Handbook referred to the company’s Employee Dispute Arbitration Policy, Rules and Procedures which clearly provided that no class-wide arbitrations were allowed and “no class or representative actions permitted.”  And, while the court expressed concerns that the Company policies and procedures could be enforced against Karp, there was “no doubt that [CIGNA] did not agree to permit class arbitration.”  Thus based on AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1840, 1750 (2011), the court held that CIGNA “could not be compelled to submit to class arbitration.”

Is Litigation an Option?

While the District Court found Karp could not arbitrate her class claims, “it did not necessarily follow that she may litigate those claims in a judicial forum.”  Indeed, it ultimately found she could not.  The Opinion found that “by agreeing to arbitrate her individual claims, [Karp] cannot serve as a class representative in a litigated class action.”  But, Karp had contended that if she was compelled to arbitrate her claims individually, she would not be able to vindicate her statutory right under Title VII to pursue pattern-or-practice claims.  Thus, according to Karp, the arbitration clause could not be enforced because it was not a viable alternative to litigation.  The Court disagreed after considering the history, potential viability and practical impact of those claims. 

According to the Court, the pattern-or-practice “claim” under Title VII was in reality “merely a method of proof.”  The District Court would not permit “a procedural device – a burden-shifting rule contained within a method of proof – to trump the arbitration agreement and the FAA.”

Based upon that analysis, the District Court granted CIGNA’s Motion to Compel arbitration and stayed Karp’s action pending arbitration.

The Bottom Line:  Another lower court enforces U.S. Supreme Court precedent supporting arbitration.  An individual cannot assert a pattern-or-practice discrimination claim to defeat arbitration.

Massive EEOC Class Action Slashed to Two Claims on Appeal

Posted by Greg Mersol on March 21, 2012

On February 22, 2012, the Eighth Circuit handed the EEOC a major defeat in a putative class-wide sexual harassment case it had brought against a trucking company.  EEOC v. CRST Van Expedited, Inc.pdf, Case Nos. 09-3764/09-3765/10-1682 (8th Cir. Feb. 22, 2012). While the court vacated, at least for the present, a $4.5 million sanction against the Commission, its holding vastly reduced what it claimed to be a case involving hundreds of women trucking employees.

The CRST case grew out of its training program for new truck drivers.  One claimant, Monika Starke, alleged that she was both subject to sexually inappropriate remarks and forced to have sex with a lead trainer to pass the driving tests.  She filed a charge of sex discrimination with the EEOC in 2005.  Following multiple requests for information, the EEOC ultimately issued a letter of determination finding probable cause with respect to a “class of employees.”  The EEOC and the employer exchanged some e-mails and telephone calls, and the EEOC quickly determined that further “conciliation” efforts would be “futile.”  One month later, the EEOC filed suit on Starke’s behalf and on behalf of an alleged class of “similarly situated female employees.”

What followed was two years of discovery in which the EEOC steadfastly resisted identifying or defining the class members.  It eventually identified a class of 270 women who it claimed were victims of hostile environment discrimination at CRST.  Following additional discovery in which the EEOC refused to produce over 100 of the women for deposition, the employer moved for summary judgment.  The district court ultimately:

  • Dismissed the claims of 120 women for failing to appear for depositions;
  • Dismissed the claims of three women, including Starke, for failing to identify their claims on bankruptcy petitions they had filed;
  • Dismissed multiple claims on the grounds that the women were not harassed, did not follow the employer’s reporting procedure, or could not identify severe or pervasive discrimination as to them; and
  • Dismissed the remaining claims (67 women) due to the EEOC’s failure to properly conciliate them.

The district court then sanctioned the EEOC $4.5 million based on its conduct before and after the filing of suit, a decision we discussed in this blog last year.

The Eighth Circuit reversed with respect to only two plaintiffs and the sanctions issues only.  The most important part of its ruling related to the dismissal of the 67 women for the EEOC’s failure to conciliate.  Citing the legislative history and the strong public policy in favor of administrative resolution of disputes, the court faulted the EEOC for using the lawsuit, rather than its pre-suit investigation, to obtain information about the potential claimants and for its resulting failure to conciliate the claims.

As to the remaining claims, it found that only two rose to the level of actionable sexual harassment and that Starke’s failure to raise the claim in her bankruptcy did not preclude the EEOC from seeking relief on her behalf.

Thus, from a high of 270 claimants, the EEOC could pursue claims only on behalf of two women.  Because those two claims survived, the court vacated the large sanctions award without prejudice.

One troubling aspect of the EEOC’s conduct in the case was that, if their facts were believed, at least one of the claims (Starke’s) was serious and could and should have been resolved promptly.  By piling on the claims of 268 other women with, at best, far weaker claims, the EEOC delayed any remedy for Ms. Starke by at least seven years.

The Bottom Line:  The EEOC’s desire to pursue class-wide claims in court does not relieve it of its statutory obligation to investigate and conciliate them first if it is contemplating filing suit.

 

 

 

 

Court Dismisses EEOC ADA Class Action Complaint Under Twombly

Posted by Greg Mersol on October 07, 2011

A recent decision from the United States District Court for the Northern District of Illinois contains three important lessons for employment class action litigation. The first is that disability cases, such as those under the Americans with Disabilities Act, are particularly hard to prosecute as a class. The second is a reminder that the parties, even if the plaintiff is the EEOC, must still meet the requirements of Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007). The third is that the EEOC, despite the first two lessons, is still taking aggressive positions in class litigation even when those positions are legally and/or factually wrong.

The case of EEOC v. United Parcel Serv. Inc.pdf., Case No. 09-5291 (N.D. Ill., Sept. 28, 2011), began as two more or less garden-variety ADA charges against shipping giant UPS. UPS furnishes its employees with up to 12 months of unpaid medical leave, or roughly four times what it is required to provide under the Family and Medical Leave Act. The first charge related to an employee suffering from MS who requested, among other accommodations, leave in excess of 12 months for her medical condition. The second was an employee with emphysema who requested assignments to generally cooler, well-ventilated work areas, was placed on medical leave because the company determined that that accommodation could not be provided. Both employees were terminated after their 12 months of medical leave expired. Both charges fell within the EEOC's latest efforts to create an obligation under the ADA for employers to provide almost unlimited leave to disabled employees under the rubric of a "reasonable accommodation." We'll leave the discussion of that issue to others.

In the UPS case, however, the EEOC not only asserted the claims of these two employees, but also asserted vague class allegations. It sought to pursue claims that UPS discriminated generally against an undefined class of disabled employees. UPS moved to dismiss those claims, citing the Twombly standard.

The district court began its analysis by recognizing that disability claims are fundamentally unlike other discrimination claims. While there is no good reason to discriminate based on race, gender, or similar traits, and employer may very well have a legitimate reason to take a disability into account where the disability prevents an employee from performing the essential functions of his or her job. Thus, the pleading standards in a disability case extend to the nature of the disability itself. 

[As an aside:  This is, of course, one key reason why it is so difficult to create a class-wide disability claim, because the type, nature, and extent of disabilities vary so widely as to defeat the 23(a) elements of commonality and typicality, as well as the superiority and predominance elements of Rule 23(b)(3).]

The district court found that the complaint only provided a "formulaic" description of the proposed class members, such as statements that they were disabled and "could perform the essential duties of her or her job without a reasonable accommodation." These vague allegations, the court held, did not meet the Twombly standard. The court similarly rejected arguments by the Commission that it was relieved of the Twombly standards because it allegedly was acting in the public interest or that it, rather than the charging parties, was the plaintiff. Concluding that the EEOC had not met the requisite pleading standard, the court dismissed the class allegations. It did, however, grant the opportunity to correct the pleading deficiencies, if possible, and noted that the action would still proceed on behalf of the two representative claimants.

The Bottom Line: The EEOC and others are pursuing class claims based on vague allegations, but courts are holding them to the Twombly pleading standards.

Post-Script:  On January 11, 2013, while the EEOC was seeking an appeal, the district court reconsidered its prior order and held that the EEOC’s proposed second amended complaint did satisfy the Twombly/Iqbal pleading standard.  While the court recognized that the Commission had couched its allegations in “conclusory” terms, they were not so vague as to justify dismissal.  Further, while the EEOC’s lack of effort to identify employees with potentially meritorious claims gave the court “some pause” it found that the allegations were sufficiently definite to avoid dismissal.

As a policy matter, the initial order was more supportable.  Even the court recognized that the EEOC has investigatory powers and obligations that most plaintiffs do not.  In light of those powers and responsibilities, as well as its extensive resources, it would not have been unreasonable to hold it to at least the same pleading standard as private plaintiffs. 

Recognizing the employer’s concern that the EEOC was simply using the complaint to engage in a fishing expedition, however, the court directed that discovery be supervised by a magistrate judge to “move the case forward through the discovery phase as quickly as possible” and to explore settlement opportunities.

Ninth Circuit Remands Sex Discrimination Case in Light of Dukes

Posted by Greg Mersol on September 20, 2011

If there was a case that might indicate what the Ninth Circuit would do in the wake of the Supreme Court's decision in Wal-Mart Stores, Inc. v. Dukes.pdf, 131 S. Ct. 2541 (2011), it was that of Ellis v. Costco Wholesale Corp., Case No. CV-04-3341-MHP (N.D. Cal.). The Ellis case was, like Dukes, a putative class action alleging sex discrimination against a major national employer. It was also filed in the same district court as Dukes and, not coincidentally, was only filed days after the Dukes district court had certified that case as the largest employment class action in history. The claim was somewhat narrower than those raised in Dukes in that it focused largely on promotional decisions to several management positions, but it did not include claims for alleged across the board pay disparities. The case was assigned to a different judge, but one that has issued several notable decisions in favor of plaintiffs in the past.

Not surprisingly, the court certified the class. Ellis v. Costco Wholesale Corp., 240 F.R.D. 627 (N.D. Cal. 2007). In fact, the court actually certified a class larger than the one sought by the plaintiffs, forcing the parties to remedy the order by way of a stipulation. Costco sought and received review from the Ninth Circuit, which held the case for over four years until the Dukes case was decided.

On September 16, 2011, the Ninth Circuit largely reversed and remanded the case in light of what it called "new precedent altering existing case law," specifically the new Dukes decision. Ellis v. Costco Wholesale Corp.pdf., Case No. 07-15838 (9th Cir. Sept. 16, 2011). Among its holdings, the Ninth Circuit found:

1. The Dukes case requires a more rigorous analysis to determine commonality that includes consideration of the merits. The plaintiff must show that there is "a common question that will connect many individual promotional decisions to their claim for class relief";

2. The district court should have considered whether the named plaintiffs' claims were "typical" of the class in light of the defenses that might be raised against them;

3. The district court erred in certifying the class under Rule 23(b)(2) because the Supreme Court rejected the previous test focusing on the plaintiffs' subjective intent in bringing the action;

4. The Ninth Circuit appeared to accept the view that the standards of Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579 (1993), should apply at the class certification stage, but found that the district court improperly confused or diluted that standard when applying it to the plaintiffs' expert. More specifically, while the court had conducted a Daubert hearing, it had ended its inquiry with a finding of admissibility, but had never engaged in the requisite rigorous analysis of whether the results demonstrated a class-wide policy of gender discrimination.

So far, so good, as these holdings are at least driven by or consistent with Dukes. At this point, the Ninth Circuit could very well have simply directed that the case be decertified.  The circuit court, however, gave the plantiffs a second bite at the apple and indicated potential places where it believed the district court could still certify the case, even under Rule 23(b)(2). Specifically, the Ninth Circuit did not reverse the decision outright, but only remanded it for further consideration in light of the Dukes standards. Further, should the district court find commonality and typicality, the court left open the question of whether punitive damages could still be considered "incidental monetary relief," and thus justify certification under Rule 23(b)(2). It also remanded for consideration of whether the case could be certified under Rule 23(b)(3), and whether the case could be divided into two separate classes for current and former employees to avoid problems between Rules 23(b)(2) and (3).

The entire case may end up faltering on the issues of commonality and typicality on remand, but depending on the evidence presented on remand, the net result may be one or two smaller classes than one large one.

The Bottom Line: The Ninth Circuit will follow many of the dictates of the Dukes case, but may leave wiggle room to avoid others.

Court Dismisses EEOC Suit Alleging Class-Wide Pregnancy Bias

Posted by Greg Mersol on August 25, 2011

We've commented before (April 20, 2011) on recent cases in which the EEOC was sanctioned for bringing and pursuing expensive, class-wide litigation without much evidence. While the case has not yet resulted in sanctions, a recent decision from the Southern District of New York reflects another instance in which the EEOC made bold accusations against a high-profile employer, but failed to back up those accusations with any real proof.

In EEOC v. Bloomberg L.P.pdf Case No. 07 Civ. 8383 (LAP) (S.D.N.Y. Aug. 16, 2011), the EEOC brought suit against financial services and media giant Bloomberg, contending that it had engaged in a pattern and practice of pregnancy discrimination in violation of Title VII. According to its own press release issued at the time of filing suit, "the EEOC asserts that Bloomberg engaged in a pattern or practice of demoting and reducing the pay of female employees after they announced their pregnancies and after they took maternity leave. Some women were replaced by more junior male employees, the EEOC says. The lawsuit also alleges that the same pregnant women and new mothers were excluded from management meetings and subjected to stereotyping about their abilities to do their jobs because of their family and caregiver responsibilities." Ultimately, discovery revealed that approximately 600 women of Bloomberg's 10,000 employees had taken leaves.

So far, sounds like a big case, but for one problem - despite the seriousness of the charges leveled by the EEOC, it had no evidence to support them. As the District Court noted in its opinion granting summary judgment, "J'accuse! is not enough in court. Evidence is required." After three years of litigation, Bloomberg moved for summary judgment as to the pattern and practice claim.

It is difficult to square the EEOC's own efforts to garner publicity for the case with the amazingly small amount of evidence. The court noted, for example, that statistical evidence is virtually required to mount a pattern and practice case. The EEOC not only failed to produce such evidence, but the largely undisputed evidence from the employer demonstrated that women taking maternity leaves continued to have thriving careers and to receive hefty pay raises. In fact, the employer was able to show that women taking maternity leaves received, on average, higher pay increases than those returning from other types of leave.

Even without the all but essential statistical evidence, the court was unimpressed by the anecdotal evidence the Commission raised, in part because it was not very accurately presented. For example, the EEOC described one unnamed class member as "a consistently strong performer" whose compensation "repeatedly remained flat" after she took two maternity leaves. That individual, however, had received only middling reviews and had received regular increases, the largest of which occurred on her return from her second leave. In other instances, the EEOC relied on hearsay or the mere representation of its counsel, neither of which was competent evidence. Other examples proved not to be true on closer examination, or to support the employer's arguments.

The court noted in several instances that Bloomberg unabashedly was a demanding employer, one that advised its employees that it expected them to put their work ahead of their work demands. It ultimately concluded that the law did not "mandate work-life balance" and that the EEOC did not establish any company-wide discriminatory practice that did violate the law. After 64 pages of careful and at times incredulous analysis, the court granted summary judgment as to the pattern and practice claim.

The Bottom Line: The EEOC will pursue high-profile claims even without the requisite evidence, but courts are dismissing them when the promised facts never materialize.

When Does "Silence" Become "Implicit" Agreement? The Saga of Jock v. Sterling Jewelers, Inc.

Posted by John Lewis on July 11, 2011

A recent Second Circuit decision has renewed the debate over when silence in an arbitration agreement can form the basis for class proceeding.  On July 1, a divided Second Circuit found that an arbitrator did not exceed her authority in ruling that an employment arbitration agreement that did not specifically address class proceedings “permitted the plaintiffs to proceed with their effort to certify a class in the arbitration proceeding.”  This ruling, in Jock v. Sterling Jewelers, Inc.pdf., Case No. 10-3247, 2d Cir., 7-1-11, allows a putative class of female retail sales employees to advance their claims of sex discrimination in promotion and pay to arbitration despite the United States Supreme Court decision in Stolt-Nielsen S.A. v. Animalfeeds International Corp., ______ U.S. ______, 130 S. Ct. 1758 (2010).  In summary, the issue in Stolt-Nielsen was “Whether imposing class arbitration on parties whose arbitration clauses are ‘silent’ is consistent with the Federal Arbitration Act.”  The court held it was not. (See our related post on Stolt-Nielsen from June 1, 2010.)

District Judge Jed S. Rakoff had earlier vacated the underlying Clause Construction Award in Jock on the grounds that the arbitrator, Kathleen A. Roberts, exceeded her authority in light of the Stolt-Nielsen decision.  (Jock v. Sterling Jewelers, Case No. 2:08-cv-02875, Order of August 6, 2010.pdf, 2010).  (Judge Rakoff was uniquely familiar with the Stolt-Nielsen case since the case was originally assigned to him and he wrote the decision reversed by the Second Circuit Opinion which was ultimately reversed by the Supreme Court).  The appellate court reversed, holding that the District Court “improperly substituted its own interpretation of the parties’ arbitration agreement for that of the arbitrator’s to conclude that the arbitrator reached an incorrect determination . . . that the . . . agreement did not prohibit class arbitration.”  The Second Circuit distinguished Stolt-Nielsen, finding the Supreme Court’s interpretation there of the parties’ “silence” pivotal.  “[T]he Court interpreted the stipulated silence to mean that ‘the parties agreed their agreement was silent in the sense that they had not reached any agreement on the issue of class arbitration.’  *  *  *  According to the majority in Stolt-Nielsen, there was no express or implicit intent to submit to class arbitration.”  And, with that conclusion, the Second Circuit set off to determine if “implicit agreement” were present in the Sterling Jewelers’ Agreement.

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Court Certifies Class of Black New York City Firefighters In Remediation Phase of Case

Posted by Greg Mersol on June 27, 2011

A recent case from the Eastern District of New York reflects that race discrimination class actions can be brought, and also reflects the type of claim which will likely still survive in the wake of last week's Supreme Court decision in Wal-Mart Stores, Inc. v. Dukes, 564 U.S. ___ (2011). (See our June 20 post on the Dukes decision). It also reflects some of the special issues that will continue to arise when employees of differing interests are included in a single class.

In United States v. City of New York.pdf Case No. 07-CV-2067 (June 6, 2011), the United States Justice Department challenged a test and related procedures used by the New York City Fire Department on the grounds that they had a disparate impact on minority applicants. During the course of the case, a black firefighters group known as the Vulcan Society successfully intervened and sought class certification, claiming a pattern and practice of race discrimination under Title VII and seeking to represent applicants who had been hired, but whose hire had allegedly been delayed as a result of the testing procedure. No, the Vulcan Society had nothing to do with Mr. Spock, but was a clever reference to the Roman god of things related to fire. In 2009, the District Court, following the grant of certification on the issue of liability only, found that the testing procedures did discriminate.

In a 48-page opinion issued on June 6, 2011, the court granted the Vulcan Society's motion to certify with respect to the remedial phase of the case, but with conditions. Interestingly, the City of New York did not appear to oppose certification per se, but did focus on the fact that the proposed class included both applicants and those who were hired. The City apparently agreed that the class was proper under Rule 23(b)(2) in that the primary goal was equitable or injunctive relief. The Dukes decision would likely have little effect on the accuracy of these positions because the resolution of one issue, the validity of the test, would resolve the entire case.

Because the primary issues were not in dispute, most of the opinion concerns the creation and management of subclasses. In a nutshell, the court concluded that while certification was appropriate in the remedial phase, the case would have to be managed through separate subclasses of applicants who were hired and those who were not. Because the Vulcan Society did not represent the non-hired applicants, and because its members had an inherent conflict of interest with those who were never hired, it also found that it could not be an appropriate representative as to the entire class. Interestingly, the court expressed concern whether the United States would adequately make determinations as to the unsuccessful applicants and appointed a Special Master to review their claims. These rulings likely flow from the court's earlier decision that the tests were discriminatory and discriminated against the entire class, and the analysis might have been different under Dukes if the plaintiffs had claimed discrimination arising from issues that were less wide-spread.

The Bottom Line: Testing cases may yet live long and prosper as class actions in the wake of Dukes. Conflicts among the class may make subclasses or other special procedures appropriate.

EEOC Sanctioned On Another Class-Wide Case

Posted by Greg Mersol on April 20, 2011

Don't let the facts get in the way of a good story . . . unless you are a governmental agency entrusted to follow the law and you are bringing an expensive class-wide case.  The EEOC has just been given this lesson, again, in a case in western Michigan.  Only a few months ago, in EEOC v. CRST Van Expedited, Inc., Case No. 07-CV-95-LRR, the Commission was ordered to pay over $4.5 million in fees and expenses in a sex discrimination action in which it was found to have engaged in similar misconduct. 

The EEOC has highly publicized its intention to pursue employers who adopt what it contends are blanket rules barring the employment of those with criminal records. This focus is part of the Commission's "E-RACE" (Eradicating Racism and Colorism from Employment) initiative.  The problem with barring those with conviction records, as explained by the United States Supreme Court in Griggs v. Duke Power Co., 401 U.S. 424 (1971), and its progeny, is that such rules may have a disparate impact against minorities.  However, the law is equally clear that an employer that does not have such a policy, or one that can defend the policy on safety or other important business grounds, is not liable.

In EEOC v. Peoplemark, Inc.pdf., Case No. 1:08-cv-907 (W.D. Mich. 2011), the EEOC brought suit against a temporary agency that it claimed had a "blanket policy" against hiring "any person with a criminal record."  It's a good story, but, in fact, it was not true - the employer had no such policy.  The EEOC's own records reflected that the case would be expensive for both sides and the litigation itself turned out to be, as the court described it, "tumultuous."  Early in the litigation, the defendant produced 18,000 documents as a result of aggressive discovery efforts by the Commission.  Those documents, however, proved that the defendant did not have a blanket policy, had hired those with criminal records and that, in fact, it had actually employed over 20 percent of the individuals the Commission claimed to have been discriminated against.  Despite this knowledge, the EEOC did not dismiss the case and did not even amend the complaint to change the allegations it now knew not to be true.

While demanding such discovery, the EEOC produced little worthwhile of its own in response to the single interrogatory propounded by the defendant.  Only when confronted with an order compelling a more complete response did the Commission identify the alleged victims of the non-existent policy, and even that production was flawed.  To make matters worse, the sole individual identified by the EEOC, a woman with two felony convictions for housebreaking and larceny, committed yet another felony during the pendency of the case and was back in prison.

Because the EEOC continued with the litigation despite its knowledge that it was without basis, the defendant was forced to hire an expert to review the extensive documentary record and to analyze the data statistically.  As its own records reflected, the EEOC knew that the case would require an expensive expert, and yet it did nothing to stop the defendant from incurring such high costs.   When the defendant moved for summary judgment, relying on this undisputed expert evidence, the EEOC was forced to confess that it had "no statistical expert to rebut [it]."

Taking all of this together, the court found that an award of attorney fees was appropriate.    It ultimately awarded the defendant the bulk of the fees and expenses it incurred more than two months after it had disclosed the documents demonstrating that the claims were without basis.  These consisted of attorney fees $219,350.70 and expert fees of more than $500,000, for a total of $751,942.48.  While this amount may seem high, it could have been worse. 

The Bottom Line:  Even if you've behaved completely lawfully, you're in for an expensive ride if the EEOC names you as a defendant because it wants to make a policy statement through the court system.

 

 

South Carolina Court Certifies Race Discrimination Action

Posted by Greg Mersol on March 07, 2011

As many of the postings in this blog reflect, there has been a veritable flood of class and collective actions asserting wage and hour violations.  But even apart from Dukes v. Wal-Mart Stores, Inc., 603 F.3d 571 (9th Cir.), cert. granted, 131 S.Ct. 795 (2010), now pending before the United States Supreme Court, discrimination cases still are being brought and may, under the proper circumstances, be certified.

In Brown v. Nucor.pdf. Case No. 2:04-CV-22005-CWH (D.S.C. Feb. 17, 2011), the plaintiffs brought suit against the employer under Title VII and 42 U.S.C. Section 1981, asserting hostile environment race discrimination claims on a class-wide basis.  They supported their claims with anecdotal evidence regarding numerous racist comments and monkey noises being broadcast over the company’s radio system, as well as other discriminatory acts. They also presented statistical evidence regarding lost promotional opportunities.  Incidentally, the plaintiffs were represented by the Alabama firm of Wiggins, Childs, Quinn, and Pantazis, among others, a firm that has scored a number of notable victories in both the discrimination and wage and hour arenas.

The suit was originally filed in 2004.  In 2007, following numerous procedural turns, the district court denied class certification, but that determination was overturned by the Fourth Circuit in 2009.  See Brown v. Nucor Corp., 576 F.3d 149 (4th Cir. 2009),  In a 2:1 opinion, that court found that the denial of certification was an abuse of discretion.  This was itself an unusual holding, but the Fourth Circuit’s decision focused entirely on Rule 23(a) did not state which of the required Rule 23(b) provisions would apply.  In fact, after the court amended its opinion, it did not even mention Rule 23(b) at all.. 

On remand, predictably, the focus of the argument was on the meaning of the Fourth Circuit’s ruling.  The plaintiffs argued that the Fourth Circuit, by omitting any Rule 23(b) discussion, essentially directed that the class be certified under Rule 23(b)(2), for equitable relief.  Plaintiffs tend to prefer Rule 23(b)(2) classes because of their relative ease of administration and the absence of any opt-out rights by class members.  The defendant argued that the court of appeals had left open the possibility of denying certification if the district court found that no provision of Rule 23(b) applied.

The district court disagreed with both parties, but still handed the plaintiffs a victory.  It found that while the Fourth Circuit had not prescribed a provision of Rule 23(b), its order was clear that some class should be certified.  It found, however, no basis to apply Rule 23(b)(2), however, because the plaintiffs’ claims for back pay and punitive damages caused monetary relief to predominate. It also refused to certify a “hybrid” 23(b)(2)/23(b)(3) class.  It noted that there was a three-way split among the circuits and that the issue was currently before the Supreme Court in Dukes.  As to the availability of a hybrid claim, it sided with the Fifth Circuit in Allison v. Citgo Petroleum Corp., 151 F.3d 402 (5th Cir. 1998), and held that none was available.  Finding that class issues predominated, it therefore certified the class under Rule 23(b)(3).

Nucor has promised another appeal.  If and when a district court ever reaches the merits, the parties will have to litigate claims that may be seven to ten years old, and will likely test the limits of the witnesses’ memories.

The Bottom Line:  Wage and hour claims may now comprise the lion’s share of class action litigation, but don’t discount the possibility of race or sex discrimination class actions, which can themselves be extremely dangerous for the employer.  Litigation of this type can and often does drag on for many years.

Sixth Circuit Dismisses Class Action ADA Case

Posted by Greg Mersol on February 24, 2011

Class actions alleging disability discrimination are rare.  In addition to the challenges posed in other types of cases, efforts to cobble a class together face an additional layer of problems relating to the identity of the class itself.  Unlike a sex discrimination case, for example, in which a class may be defined by a single trait, disabilities take myriad forms and make it all but impossible to claim that class issues predominate.

One arena in which plaintiffs have had at least some success relate to policies relating to return to work following an absence, or other blanket policies that may affect disabled individuals irrespective of the nature of their disability.  A recent case, however, reflects that even plaintiffs in these types of cases will face an uphill battle.

In Lee v. City of Columbus.pdf, Case No. 09-3899 (Feb. 23, 2011), the City of Columbus implemented a policy requiring employees returning from leave or light duty to disclose the nature of their illnesses to their supervisors.  Two classes of police department employees challenged the requirement, arguing that it violated the prohibition against medical inquiries under the Rehabilitation Act, 29 U.S.C. §§ 791 et seq. (which has been held to incorporate the requirements under the ADA, see 42 U.S.C. § 12112(d)(4)(A)), and their constitutional privacy rights.  The district court found that the policy did, indeed, violate the Rehabilitation Act, granted summary judgment for the plaintiff classes, and also enjoined its enforcement.

The Sixth Circuit, however, reversed.  Unlike the district court, it did not find a question about a general diagnosis as being overly intrusive.  It also found that while the policy might result in the disclosure of a disability to the supervisor, that was not the policy’s intent and such an inquiry would not necessitate the disclosure of disabilities.  It similarly rejected a ruling by the district court that the policy violated the Rehabilitation Act because the disclosure was to the direct supervisor, and not the human resources department.  Finally, it concluded that the rule did not violate the employees’ constitutional rights.  It remanded the case for the entry of judgment in the city’s favor.

The Bottom Line:  Class action disability cases are difficult to hold together.  Even uniform policies, which may make identity of the class feasible, often have legitimate underpinnings that will deprive the plaintiffs of any right to relief.

Sixth Circuit Affirms Summary Judgement in Multiple-Plaintiff Firefighter Case

Posted by Greg Mersol on December 28, 2010

Litigation often begets more litigation. A recent decision of the United States Court of Appeals for the Sixth Circuit reflects that even 35 years after it thought it settled a lawsuit regarding the hiring and promotion of officers in its fire department, the City of Memphis, Tennessee is still embroiled in litigation involving some of the same issues and their fallout.

Litigation involving alleged race and sex discrimination by the Memphis fire department has had a prominent history. Judgment decrees regarding race and employment practices were entered in 1974 (regarding promotions) and in 1980 (regarding hiring and promotions). The same fire department was the subject of the U.S. Supreme Court's 1984 decision in Firefighters Local Union No. 1784 v. Stotts, 467 U.S. 561 (1984),  when the department, due to budget reasons, began laying off firefighters hired under the 1980 consent decree. Sometime afterwards, the department was embroiled in still more litigation, this time by white and Hispanic firefighters, when it threw out the results of a promotional test that arguably had a disparate impact on African Americans. See Oakley v. City of Memphis, Case No. 07-6274 (6th Cir. 2008), vacated and remanded following Ricci v. DeStefano, 129 U.S. 2658 (2009).

Most recently, in Aldridge v. City of Memphis, the department was the subject of litigation by 26 former captains who were affected by a combination of the 1974 consent decree and a city charter provision granting "captain" status for any firefighter with 30 or more years of service. While technically not a class action, this decision highlights the ongoing problems with injunctive relief in large employment actions, and the impact even decades later.

Back in 1927, nearly 50 years before the litigation started, the City of Memphis amended its charter to grant "captain" status to firefighters after 30 years of service. The rule apparently rested upon the assumption that firefighters would slowly climb the promotional ladder and "achieve" that status at that time. In reality, however, many firefighters, despite good service in their positions, had not served as officers or in more senior positions, and, as a result, continued to serve in those roles even after their technical "promotions." The primary benefit of captain status became that of increased pay and retirement benefits. As the number of "captains" who achieved the rank through 30-year tenure increased, the city created a dichotomy between "merit" captains, which were now termed "majors," and "tenure" captains, who continued to be called "captains." The growing number of unnecessary, yet higher-paid, captains began to create both friction and budget problems in the department. In 2005, the department essentially abolished the position of "tenure captains." The date is significant because it was only one year after women and minorities began achieving the 30 years of service under the 1974 decree. Those holding the position were given various options, such as retiring or returning to their former rank.

A diverse group of affected tenure captains, including 16 white males, 7 black males, 2 black females, and 1 white female, filed suit, asserting a variety of claims. The claims included those for violation of the city charter, implied contract, and race and sex discrimination. Much of their case rested upon alleged statements by the department director expressing contempt for "tenure captains" generally. The district court granted summary judgment for the defendants, and the Sixth Circuit affirmed. The court concluded that nothing obligated the city to continue tenure captain status and, while the director's remarks were harshly critical of the tenure captain status, nothing equated that criticism with race, sex, or age. Because the city had based its decision on economic factors, the elimination of the position was lawful.

The Bottom Line: Some cases never die. Expect more class litigation of all stripes as more cities find themselves unable to continue pay and benefits systems created decades ago.

$175 Million Settlement in Sex Bias Class Action

Posted by Greg Mersol on July 15, 2010

While most employment class actions today address overtime or independent contractor issues, discrimination actions are still alive and very dangerous for employers. Last May, a New York jury awarded $3.4 million in compensatory damages, and $250 million in punitive damages against pharmaceutical company Novartis in a case alleging sex discrimination involving sales representatives. That's a quarter of a billion dollars, and doesn't even include attorney fees.

On July 14, 2010, the court approved a settlement of that verdict for a total of $175 million. Of that amount, about $100 million was set aside for compensatory damages to the approximately 5,600 class members, an estimated $22.5 million was allocated as "non-monetary relief" in the form of new company programs to address discrimination, and $40 million was awarded to the plaintiffs' attorneys for fees and expenses. $164,500, or approximately one third of one percent of the attorney fee award, was designated to be paid to an unidentified nonprofit organization to advance women in the workforce.

The bottom line: Race and sex discrimination claims may in many cases be more difficult for plaintiffs to mount than wage and overtime suits, but the Novartis verdict and settlement demonstrate that such claims present very real dangers for employers.

The Dukes Decision Does Not Apply To Overtime Misclassification Claims

Posted by Greg Mersol on June 16, 2010

In the weeks following April 26, 2010, en banc decision of a deeply divided Ninth Circuit in Dukes v Wal-Mart Stores.pdf, 603 F.3d 571 (9th Cir. 2010), plaintiffs have predictably argued that the opinion justifies the certification of classes of virtually any size, including those in the overtime/misclassification arena. The case, however, does not apply to such claims by its own terms.

The Dukes case involved a pattern and practice claim under Title VII of the 1964 Civil Rights Act (“Title VII”), 42 U.S.C. §§ 2000e et seq., for gender discrimination in pay and promotions. The plaintiffs’ claims were bolstered by statistical evidence allegedly showing that while two thirds of the hourly Wal-Mart associates were women, only one third of managers were female, and by similar evidence that pay disparities existed in some stores as well as expert and anecdotal evidence regarding discriminatory conduct. The plaintiffs also made a showing, the court found, that Wal-Mart had a uniform personnel and management structure throughout its stores (a factor frequently absent in overtime cases), extensive centralized corporate control over its stores (ditto), and gender disparities in every domestic region of the company. Id. at 600. Relying heavily on the “abuse of discretion” standard of review, a bare majority of the court upheld the district court’s decision to certify the class.

The Dukes decision, however, contains nothing suggesting that large overtime classes should be certified. First, of course, the Ninth Circuit was reviewing the certification decision under an abuse of discretion standard, and even under that lenient benchmark fully five of the eleven judges believed it to be erroneous. The opinion thus is far from a ringing endorsement of the decision to certify, and nothing in the majority or dissents suggests that certification would have survived a less lenient review.

Second, the claim at issue in Dukes bore no relationship to overtime claims. Indeed, the majority took care to emphasize that the plaintiffs’ claims were those for an alleged pattern and practice of gender discrimination under Title VII, claims that by definition required no individual inquiry. Id. at 619, n. 41. It chided the dissent for what it described as a “misguided” concern for individual inquiries in that context. Id.

There is, of course, no such thing as a “pattern and practice” claim under the Fair Labor Standards Act or under any state overtime law that we are aware of, and particularly in misclassification cases both state and federal courts have emphasized the need for an individual inquiry regarding the duties of the putative class members. Thus, the text of the Dukes opinion reflects that the case was decided under a statute under which the individualized inquiry mandated in the overtime context was irrelevant. Further, nothing in Dukes suggests any misgivings about its prior holdings in the Wells Fargo.pdf and Vinole.pdf cases, in which the court rejected the certification of overtime classes far smaller than the class alleged in Dukes.

The Bottom Line: The Dukes case does stand for the proposition that a district court in the Ninth Circuit may not abuse its discretion by certifying a large uniform class in a Title VII pattern and practice case in the face of strong statistical evidence of gender discrimination . However, it sheds no light on whether a court should certify an overtime class of individuals working in a range of functions across different facilities when, by law, an individualized inquiry is required.